The Compound and Friends - Getting Ready for the “European Kill Switch”

Episode Date: March 2, 2026

On this episode of Live From The Compound, we break down the shift in global market leadership as international stocks outperform the U.S. While many investors credit valuations and a weaker dollar, Matthew Tuttle argues something bigger is happening: Europe is rebuilding not just its military, but its digital infrastructure to reduce dependence on U.S. tech platforms. Matt, CEO and CIO of Tuttle Capital Management, joins Downtown Josh Brown to discuss digital sovereignty, shifting procurement, and whether this marks a cyclical rotation or the start of a structural reallocation away from U.S mega-cap dominance. We cover the impact on defense, cloud, U.S. tech giants, China exposure, currency effects, and how investors should size the opportunity. This episode is sponsored by Public.  Find out more at: https://public.com/Compound Sign up for ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠The Compound Newsletter⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ and never miss out! Instagram: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://instagram.com/thecompoundnews⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Twitter: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://twitter.com/thecompoundnews⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ LinkedIn: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://www.linkedin.com/company/the-compound-media/⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ TikTok: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://www.tiktok.com/@thecompoundnews⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Public Disclosure: Paid endorsement. Brokerage services provided by Open to the Public Investing Inc, member FINRA & SIPC. Investing involves risk. Not investment advice. Generated Assets is an interactive analysis tool by Public Advisors. Output is for informational purposes only and is not an investment recommendation or advice. See disclosures at public.com/disclosures/ga. Past performance does not guarantee future results, and investment values may rise or fall. See terms of match program at https://public.com/disclosures/matchprogram. Matched funds must remain in your account for at least 5 years. Match rate and other terms are subject to change at any time. Investing involves the risk of loss. This podcast is for informational purposes only and should not be or regarded as personalized investment advice or relied upon for investment decisions. Michael Batnick and Josh Brown are employees of Ritholtz Wealth Management and may maintain positions in the securities discussed in this video. All opinions expressed by them are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management. The Compound Media, Incorporated, an affiliate of ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Ritholtz Wealth Management⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. For additional advertisement disclaimers see here ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://ritholtzwealth.com/advertising-disclaimers⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Investments in securities involve the risk of loss. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. The information provided on this website (including any information that may be accessed through this website) is not directed at any investor or category of investors and is provided solely as general information. Obviously nothing on this channel should be considered as personalized financial advice or a solicitation to buy or sell any securities. See our disclosures here: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://ritholtzwealth.com/podcast-youtube-disclosures/⁠⁠⁠⁠ Learn more about your ad choices. Visit megaphone.fm/adchoices

Today's show is sponsored by Public, the investing platform for those who take it seriously. On public, you can build a multi-asset portfolio of stocks, bonds, options, crypto, and now generated assets, which allow you to turn any idea into an investable index with AI. It all starts with your prompt, from renewable energy companies with high free cash flow to semiconductor suppliers, growing revenue over 20% year over year. You can literally type any prompt and put the AI to work. It screens thousands of stocks, builds a one-of-a-kind index, lets you back tests, and then you can invest in a few clicks. Generated assets are like ETFs with infinite possibilities.

Customizable based on your thesis, not someone else's. Go to public.com slash compound and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com. slash compound paid for by public investing full disclosure and podcast description all right we are here live from the compound guys the first time guest with me today super excited to get into this conversation from the october lows the mc iifa index is up about 20 percent the s&p is up closer to 14 over the same stretch uh but year to date ifa we call it efa on the street is up a at 8% versus 4% for the S&P.

Merging markets are up as well. A lot of the MAG 7 names peaked months ago, though, and they've either stalled or pulled back, and it's taken a lot of the oxygen out of the U.S. stock versus international stock story. At the same time, the U.S. dollar index is also down. I don't think it's a one-month rotation. I think it's bigger than that.

Most investors are explaining it away with the standard playbook. They'll say, well, the stocks were cheaper or the dollar is weak or its mean reversion because U.S. stocks have dominated. But Matt Tuttle thinks that misses the real story. Matt is the CEO and chief investment officer of Tuttle Capital Management. Matt has built a reputation for pioneering high-profile ETFs and was instrumental in the launch of single-stock ETFs in the U.S.

He's also a frequent guest in the financial media. This is his first time here on the compound. Matthew, welcome. Thanks for joining us. Hey, thank you very much for having me. So you wrote this thing where we're talking about Europe specifically, and you talked about the market missing the bigger story with this international stockout performance. And part of what you were saying was the Europeans are working on a kill switch.

And I wanted to start there, and then we can get a little bit broader. But for people that didn't read your piece, what is the European kill switch and why should investors pay attention? to it. Yeah. And, you know, as you said in the beginning, people are missing the boat, but they're also missing the boat just jumping into international. You've got to be thematic. You've got to understand kind of the dynamics going on. So we did right after Trump got elected, we did EUAD, European aerospace and defense, figuring that, you know, the European countries we're going to have to spend in their own companies for their own defense. We see digital sovereignty is a lot similar to that.

We've seen that if you're relying on somebody else for your own defense, that's a problem. If you're relying on somebody else for energy, that's a problem. Digital sovereignty to us is the same thing. So you've got this arms race going on between. the U.S. and China on AI, and everyone's kind of forgetting Europe, and Europe is sitting there saying, you know, hey, we don't want to be reliant just on the U.S. We want to start bringing in our own companies. So that's what we're talking about. Okay. So the Europeans in Internet 1.0, they spent most of that time allowing U.S. dominant technology companies to come in,

companies like Microsoft, et cetera. We sold our PCs there. We sold software there. We handled the build out of their websites like we were the dominant player. Then the cloud computing era gets underway, let's say 2015, 2016. It's mostly the European cloud computing is U.S. cloud computing. It's mostly the same companies. And as we innovated, they decided they were going to spend their energy and attention

regulating. This time, they don't want to play the same game and they want to actually have native, I mean, how realistic is it for the Europeans to ever be able to kill switch our stuff, turn our stuff off, and light their stuff up? They're not there, but you're saying like, that's where things are headed and you're saying the proof of that is, look what's happening with the European defense stocks. All of a sudden, they want to make missiles. Yeah, and that's exactly it. I mean, there's not a European Mag 7. There's not a European Navidia. They still are going to need us. But what I think you've got is a couple of things. You've got a political situation where our leaders and their leaders are not necessarily

agreeing, you know, a situation where, you know, we've got a president who's maybe not doing things of the way other presidents did and is unpredictable. And, you know, they want as much, and you're seeing it where, you know, France came out and said, hey, we want to get off teams or we want to get off Zoom. So they're only going to be able to do it to an extent. But, you know, when you look at and you're talking about, you know, hey, people are investing internationally, to us, you've still got to be thematic there. Where are the areas going to be?

And if you look, you know, and I'm an ETF guy, but I'm. I think a lot of these international ETFs leave a lot to be desired because what you're getting is a lot of financials and, you know, not that much tech. I would rather say, you know, I want to be concentrated in areas. Digital sovereignty is one. Okay. So when you buy a developed market international stock ETF, you're not going to be able to capture this theme unless it's like sort of a re-rating in the multiple, which is sort of what we've had so far, like a rising tide, lifting all of those stocks. But like, if you really want to play into this idea of the Europeans getting serious about their own defense, their own platforms, their own digital, what do you do?

Let's say somebody agrees with what you're saying, then what? Yeah, I mean, so for digital sovereignty, there is no ETF yet. Okay. Let's see maybe. What are you so busy doing? all this time. I mean, we're filing for a whole bunch of stuff. I don't know if that Halo thing was your idea, but we just filed for that on Friday.

Yeah, no, I'm going to sue you guys for that. I'm sorry. We could talk about that. We could talk about that later. But so, like, what is the person who says, you know what? I agree. It really does seem like, this is what you said. International and emerging market equities have been outperforming United States.

Most investors explaining it away with lazy narratives. Then you said the main event. is this, the world building optionality away from U.S. policy and platform dependence. And once you see it, you can't unsee it. So some of the biggest winning stocks that I've seen internationally are like what's Ryan Metal is a German munitions maker. Like I am seeing that start to really go. Like all of those stocks are doubling, tripling. So I would love to figure out what's the trade on this. I don't want to say more. belligerent Europe, but like this Europe that's starting to feel itself.

Yeah, there are. It's tough. Yeah, well, there are some ADRs for the European digital sovereignty. There's Cap Gemini. I mean, everyone knows ASML and SAP. Right. Deutsch Telecom. Erickson, Infion, you know, Nebius is one that I think a lot of people know.

So there are some stocks. There's not a lot on the ADR side, but, you know, there's probably, about 10, 12 names that you could go into on the ADR side until someone decides to do an ETF for. Okay. A lot of people over this weekend, when they looked at the invade, I want to call it invasion, the bombing of Iran and the decapitation of the power structure there and who knows, you know, where this will go.

But a lot of people looked at that and they connected the dots to what we did in Venezuela. and the reason why that's potentially meaningful, not just for investors, but also for investors, is that Venezuela and Iran were the primary suppliers of oil to China. And again, we have no idea whether or not Iran will be selling oil today, tomorrow, who they're selling it. So, but just people looking at that and saying, wait a minute, is this whole thing like a checkmate to China cutting off its client states that we're supplying it with oil. And so now this sort of does become like a macro challenge or puzzle to figure out

beyond just the political ramifications. Can you talk a little bit about that idea and where China plays into the whole digital sovereignty thing in addition to the energy dependence issues? Yeah. And the thing that Trump makes interesting with the markets is a lot of stuff is art of the deal. So, you know, we don't know. Why did he invade Venezuela? Why did he pull Maduro out of Venezuela?

Why is he bombing Iran? We hear the story, but you figure there's a lot more to it. You know, China, as far as AI, physical AI is going to be a huge player. You know, you've got the Babas, the Baidus. You know, those are typical ways to play at K-Web and E.T. You know, no one yet has done a Chinese-specific humanoid robots. What they're doing on robots is interesting. They're also ahead of us in a lot of areas.

So I do think China is someplace that you cannot ignore when you're investing globally. But again, I think you focus, you don't just buy a China ETF. You want to focus on the AI stuff. You want to focus on the robotic stuff. A China Tech ETF will get you much further down that road. Yeah, I can't. Those are the companies that will do it. Much further down that road than like an FXI would.

I agree with you. I agree with you. It'll help you express that major theme. You've said that a U.S.-China trade fight is increasingly a third country game. The market is slowly waking up to something that central banks and policymakers have been talking about more explicitly. when trade barriers rise, trade doesn't disappear, it reroutes. That means relative winners and losers shift across European Union, EM Asia, Latam,

and selected connectors. So if you're investing internationally in this day and age, what is the big takeaway do you think for investors? Yeah, so I think it is thematic in sticking with today and tomorrow's top themes. So, you know, AI is a game changer in so many different ways, but now it's beyond just, hey, buy Navidia, you know, buy some, you know, infrastructure, buy some cooling. There's so much more going on like the European digital sovereignty, like a Chinese robot. You're going to see opportunities in emerging markets on the digital side as well, not nearly as many, but, you know,

you want to look at, and you want to look at those dislocations, you know, the winners, the losers, the halo idea. There's so much now going on beyond what was going on last year where it's just like, hey, buy AI and forget about it. Do you think the international stock outperformance can continue throughout the course of 2026? I think it, can. I mean, but at the end of the day, you don't ignore the U.S. I mean, we said it at the beginning. The real winners are still here. None of this happens without Navidia. You know, you look at all the kind of key, and we do a lot of thematic research, you look at all today and tomorrow's top themes and figure out who the winners are. It's still one or more mag-7 names. So, you know,

it's a rotation. You certainly want to be over there. but you don't want to ignore the U.S. A lot of investors have just forgotten that these markets exist. I think on the financial advisor side, we've probably done a better job than average, continuing to build global diversification into our portfolios. But even on the advisor side, there's a lot of advisors just like after 10 years,

just got sick of explaining themselves to their clients, sick of saying they're sorry every year that the S&P was lapping, the EFA and the EEM. But I still think like advisors are better than average, certainly versus retail. But now retail is starting to rediscover that these other markets exist and that they can outperform.

And I think that that's the big shift that's happening now. And my guess is this kind of thing is probably not a six-month phenomenon. I think once this starts, people just start to learn the companies, learn the tickers of the ETFs, and it could have three years, five years in it. And it's exciting to me because it's boring

to watch the S&P just beat everything every year. And that didn't happen last year. And I don't know that it'll happen this year. Yeah, I mean, I would agree with you. But the thing I would say is, again, you've got to be thematic. I wouldn't just say, all right, I'm going to buy an emerging market ETF. I'm going to buy an ETF, check the box.

I've got that exposure. you know, there's so much going on, like, you know, aerospace and defense, what we saw that doing last year, you know, if you're just buying a European ETF or an EPA ETF, your exposure to that theme is, you know, minimal, if any. So I still think you've got to be thematic over there. But, yeah, I mean, I agree. I don't think this is just a, you know, one-hit wonder. You laid out two different themes. one is Europe's next build out, and we talked about that, defense, digital sovereignty, European aerospace, those stocks have already gone up a lot, and maybe they'll keep going,

but that theme has been proven. The second theme, it seems a little bit squishier or more difficult for an investor to put their finger on the opportunity. But you're talking about the euro stack. So you say, Eurostack is the blueprint, even if the first versions are clunky. If defense is Europe's hard power rebuild, Eurostack style thinking is the soft power rebuild, a push toward a European controlled tech stack across compute, cloud security, and apps. It's not European SaaS.

That's not where you think this is going. You listed four areas where the winners will be. compliance required procurement lanes, regulated data environments, defense and civilian crossover, meaning security comm satellites, and then integration slash implementation. Do the products yet exist for a one-click investor to be able to do that? Would you try to build a basket like this utilizing AI going on the public platform, for example? they've built an AI that allows you to express a theme and they will populate it with stocks. Like, what would you do if you were trying to gain exposure to that Eurostack theme, that concept?

Yeah, and you're right. It's not as clean as aerospace and defense. You've got specific defense companies in Europe. They're getting money, earnings go up, stock price goes up. But like I said before, they're, you know, 10 to 12 ADRs. that you could invest in, you know, enough liquidity for an individual investor to invest in them. And, yeah, you can use AI to help you do that. I mean, you know, it's an amazing tool.

You know, use it. And you could create a nice little basket of these names. You know, hopefully sometime soon there will be a one-click ETF because I do think you also want to include the locals. and, you know, they're not all there as far as I've been able to see in ADRs. I'm going to reel off some of these names because I think for our viewers and listeners, they're probably unaware of most of them. And maybe you could react to some of these or tell us how these made your list. So on the Europe defense and aerospace story, you've got Airbus, which is obvious, BAE Systems,

Ryan Metal, if I'm pronouncing that right. Yeah. Leonardo, Sob, Thales, and DeSault Aviation. Why don't you tell us about those, and then we'll look at the digital sovereignty names after? Yeah, and those are all very clean, like, you know, the Lockheed Martins, the Raytheons of Europe. That's where the money's going. One of the things that we try very hard to do when we're constructing E.T. is we want pure play.

So I get a lot of pushback on EUAD because, oh, it's so concentrated. It's like, look, I could put 40 names that get 10% of the revenue from defense spending if you want to feel more diversified, but I'm not going to do that. I want to create a product that I want. And those are the key names where the money is going, you know, that are building the products that the European countries are looking to build for their own defense. Right. So that fund, EUAD, European Aerospace and Defense, how long before the dominoes started

to fall where people started to realize what you guys had realized was going to be like investable? How long did that take from the launch? I mean, too long. We launched it right after Trump got elected because to me, this was the obvious. obvious Trump trade. And I was pounding the table for it. And really it was, it was up 70 percent. And then all of a sudden, everyone's like, oh, my God, I want to buy this. Dude, you should have been listening to me 70 percent ago. Yes, but they needed to see the 70 percent in order to believe. It is, it is how works when you're early. You know, we just launched, you know, a UFO disclosure

ETF way early on that. I'm pounding the table that, you know, that that's going to be an area you're going to want to be in. No one's going to listen to me on that either. I don't think I could follow you into that one. All right. Digital sovereignty, the plumbing. So you

say these are like cloud, telco, integration, boring, quote, boring but mandatory. These are your examples of sovereignty adjacent beneficiaries. OVH cloud. I.O. NOS. Orange, which is pipes and government relationships. Deutsche Telecom, which is pipes and public sector relevance.

And Cap Gemini, which is like a migration integration player, as companies are forced switch from an American provider to a European provider. Cap Gemini will get some of those workflows. Then some of the space and satellite stuff, U-TELSTAT, you tell us that. and SES. I barely know any of those companies. So why do those make the list? And why do you think investors will get the benefit

of those working in this new world that you described? Yeah. And again, none of these are a heppelinda video. You know, what you get in Europe is you get telecom, you get cloud, you get kind of the business services. and, you know, and there's a little bit of semiconductors there. You know, so that's... ASML, most notably.

ASML, STM. You used to have arm, but that's... Yeah, I mean, Infinion's another one. So, you know, there's not a lot there, but those are the names that are there. And, you know, so they're the ones that are best positioned to get these dollars if they flow out of the U.S. companies into the European companies. You know, when you're replacing teams and Zoom, you're replacing them with some sort of network made by one of these companies. Which U.S. stocks are the most susceptible to you being right about this? I think probably Zoom.

Okay. Which got destroyed last week. I didn't even see. I've been in and out of that stock for years. I didn't even see what happened last week. Did they lose your? Yeah, I didn't see what happened last week either. I think they've got a large stake in like Anthropic. And that could have been it. Don't quote me on that. But, oh, Anthropic is on the Trump administration shit list. So, yeah. So that could be it or that could be part.

I mean, a lot of tech stuff got destroyed. So it could have been a bunch of things. Do you worry about the Googles, Cisco's and Microsofts? They're much larger than Zoom. They're much more entrenched in Europe. Do you think that those companies are susceptible to some sort of like nationalist wave or they're just too important? I mean, susceptible, yes, but also too important. You know, I'm not going to say, hey, I'm not going to own Google because I'm worried about the EU.

Okay. I'm really more like- They've been dealing with the EU since 2004. Right. To me, it's more I'm going to own Google and I'm going to own the EU companies. Not I'm getting rid of Google and buying EU. you. Okay. All right. It's an interesting, it's a really interesting idea. Do you think there'll be a big enough market for it that an ETF launch at some point might make sense? Or you think investors are

better off just finding a few tickers, learning the stories, and picking their spots? You know, I think there's probably an ETF coming for this that's going to make sense. Okay. You know, ETFs are access vehicles. You know, it's easy to have a one touch and especially ADRs. I mean, if you don't know what you're doing, you know, it could be a massive company. The ADR might not trade well. Yeah, I think this is something crying out for an ETF. Okay. Tell us a little bit about total capital. You founded the firm. How many years ago? 2012. We've been doing ETFs for 10 years. We've got a little over $4 billion in AUM, probably about 68 ETFs.

We just branched out into wealth management as well, so we're starting to ramp up there. And we like to launch thematic things before anyone's thinking of them. We like to do professional level option strategies. And we like to do like real index exposure, not, hey, here's 100 names. We're really only five of them, you know, do that. And then, you know, we're known for the, this, the levered and inverse 2x stuff as well.

I'm a trader at heart. I like to provide products for traders. Dude, this has been a pleasure. Thank you so much for, thank you so much for coming on the compound. We appreciate it. Where is the best place for people to get your thoughts on a regular basis? Like, where can they follow you? Yeah, go to our website, tuttlecap.com. You can sign up for our newsletter. It's free. We write about themes every day. Awesome. Matthew, thanks again. Really appreciate it. Thank you.